It's up to the buyer and the lender to make sure the buyer has enough income to handle upward rate adjustments. Reputable lenders will only lend to people who have the income to cover their interest payments under almost all forseeable interest rates in the future. Disreputable lenders could cause some problems in the next few years if their income standards were too low, but I doubt that defaults will be a major economic problem. The risk to the economy is more that interest payments will go up and slow down consumer spending. We're at the point where we really need to increase exports to China and developing countries to create more jobs that aren't driven by US consumer spending.
We had an explosion of storefront lenders out here over the last few years. Mining the sub-prime market, even the sub-sub prime. Some of these clowns have been caught steering borrowers to junk when the borrower could qualify for a conventional loan. They prey on the lack of knowledge of the borrowers. High prepayment penalties are standard. These lenders don't keep the loans, they package them and sell them off to hedge funds and other buyers of CMOs.